Questions and Answers of Purchasing And Supply Management

Be sure that we choose the best supplier available?
Balance fi nancial and nonfi nancial factors when selecting suppliers?
Reach agreement with internal business partners on evaluation criteria and weighting?
Switch from informal to formal supplier evaluation?How can we
Use one, two, or more suppliers for a specifi c requirement?
Use cross-functional sourcing teams to select suppliers?
10. Please comment on the following statement: Target costing can only be used for manufactured items and cannot be applied to services.
9. What is the difference between “managing costs” as opposed to “managing prices”?
8. What is total cost of ownership (TCO), and how is it determined?
7. What is activity-based costing (ABC), and how can the buyer use ABC to reduce costs?
6. Why do firms use target costing? How are target costs established?
5. What is a learning curve and how can it be used?
4. When and how is negotiation used, and what can be negotiated?
3. What are the major cost categories that you would include when estimating a supplier’s cost for a service? How would you estimate the cost if the supplier was either unwilling or unable to
2. What are the major cost categories that you would include when estimating a supplier’s cost for a manufacturing item? How would you estimate such costs if the supplier was either unwilling or
1. What is cost-based pricing? How and why is it used?
If the equipment is for production, what is the projected cost of producing the product compared to the cost of obtaining the product from a supplier?
If the equipment is for production, what is the present cost of producing the product compared to the cost of obtaining the product from a supplier?
What fi nancing costs are involved?
At what rate is the machine to be depreciated?
Can the user make the machine or must it be purchased?
What is the number of machine-hours the equipment will be used?
What will be the operating costs, including power and labor?
Are accessories required and, if so, what will their costs be?
Who will provide repair parts and at what cost?
What will be the maintenance and repair costs?
Will its installation create problems for plant layout?
What will start-up costs be?
What is the installed cost of the equipment?
Is the equipment intended for replacement only or to provide additional capacity?
Achieve our objectives in a negotiation with an important supplier?
Make a cost analysis on all our large-dollar purchase items?
Understand what it costs our suppliers to manufacture their products or deliver their services?
Estimate total cost of ownership for all our purchases?How can we
Negotiate with our suppliers or accept their existing terms and conditions?
Use target pricing?
11. What is the difference between forward buying and speculation?
10. Does hedging remove all risk? Why or why not?
9. Why might a buyer wish to hedge a commodity purchase? How would the buyer do that?
8. What are cash discounts, quantity discounts, trade discounts, and cumulative discounts? Should the buyer attempt to use these discounts? How?
7. What can the buyer do if he or she suspects collusion on the part of suppliers?
6. Distinguish between direct and indirect costs. How can the buyer analyze these costs?
5. What methods can the buyer use to establish price for (a) raw materials, (b) professionals services, (c) parts, components, and packaging, and (d) MRO supplies?
4. What are the various ways by which prices are determined?
3. How is supplier cost related to supplier price?
2. What disadvantages does the competitive bid process have as a method of price determination?
1. What is the significance of the Sherman Antitrust and the Robinson-Patman acts to the industrial buyer?
Know when to allow price changes during a contract?
Use the futures market to hedge the purchase of raw materials?
Spot and combat price fi xing?
Use forward buying?How can we
Take advantage of a volume or cash discount offered by a supplier?
Use competitive bidding as our principal means of price determination?
14. What are the key issues when deciding how a service is delivered?
13. What is the difference between on-premise and off-premise delivery of IT services?
12. Under what circumstances might a buyer prefer each of the following carriers: TL, LTL, air, water, rail, intermodal?
11. How would logistics decisions be affected by a JIT purchasing arrangement?
10. What strategies should be developed to effectively manage the logistics function?
9. Why should a buyer audit payments for freight purchases?
8. What does FOB mean? What variations are there in FOB terms?
7. What are the use and significance of the bill of lading?
6. What kinds of shipping needs are best met by a courier and why?
5. What types of transportation damage might occur and how should each be handled?
4. Why might an organization decide to outsource all or some of its logistics activities to a third party?
3. How do firms organize to handle the logistics function?
2. What factors should be considered in selecting a mode of transportation? A carrier?
1. Which logistics activities are most commonly outsourced to 3PL providers and why?
Ensure that we attain the optimum mix of reliability, cost, and service from delivery service providers?
Identify value-added logistics services that will reduce our overall costs?
Develop an effective delivery strategy for goods and services?
Outsource some or all of the logistics function to a third party?How can we
Use FOB (free on board) origin or FOB destination terms, or some other designation?
Designate delivery mode and carrier, or let the supplier do it?
11. Describe sources of variability in the supply chain. How does variability increase supply chain costs?
10. How does intangibility of services affect quantity decisions?
9. Why would anyone prefer to use a fixed-period reordering model over a fixed-quantity one?
8. What is the difference between JIT and MRP?
7. What problems do inaccurate usage forecasts create for buyers? For suppliers?
6. What is a kanban and why is it used?
5. What are buffer inventories?
4. In a typical fast-food operation, identify various forms and functions of inventory.How could total investment in inventories be lowered? What might be the potential consequences?
3. Why is it expensive to carry inventories?
2. What is a master production schedule and what role does it perform?
1. Of what interest is ABC analysis?
What role does negotiation play in resolving these issues?
When should responsibilities for dealing with the results of inaccurate forecasts be outlined in the contract?
Should the supply manager be held responsible for meeting forecasts or actual requirements?
Should suppliers be held responsible for meeting forecasts or actual requirements?
If the forecast is wrong, who bears the risks?
Should other supply chain members be involved in a collaborative forecasting effort?
Should the supply management group be allowed to second-guess sales, production, or user forecasts?
Where should the responsibility for forecasting future usage lie?
Initiate a services consumption management program?
Improve our inventory management?
Reduce our investment in supply chain inventories?
Purchase our A items differently?How can we
Use vendor-managed inventories?
Change the way we forecast?
10. Why should supply be concerned about the balance sheet?
8. How can supply sell itself more effectively internally?

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